Howard has won, but now he'll have to show real courage

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There are vital tax and workplace reforms that the PM must push through, writes Alan Anderson.

I love Australia, but never more so than on election day. This
election day, I loved it more than ever.

At the international level, John Howard's victory demonstrates
that the hawkish leaders of the Anglosphere can fight and win
elections post-Iraq, giving comfort to George Bush. It also sends a
message to the terrorists that, in the English-speaking world,
their atrocities will only stiffen resolve to defeat them.

But the most important aspect of the victory was the Senate
result, which has profound domestic implications. From next July
the Coalition will control half of the Senate seats. This means
there will be no more shunting off important legislation into
interminable committee hearings and inquiries. More significantly,
the victory of Family First in South Australia and possibly
Victoria will give the Coalition an opportunity to pass legislation
with its support.

A brief review of the Family First website reveals gems like,
"government should be as small as possible" and "the allocation of
resources, goods and services in our society is most often best
done by businesses operating competitively". Free market policy
wonks must be drooling at the prospect of these people holding the
balance of power.

Critics of Howard, including myself, denounced his lack of a
substantive reform agenda. The Coalition now has eight months to
create one.

The most pressing problem is our outrageously uncompetitive
income tax system, which is driving many of our best minds
overseas. The Coalition's No.1 priority must be to implement
serious tax reform.

At the top end of the scale, this should involve lowering the
top marginal rate to the company tax rate of 30 per cent. At the
bottom end, the interaction between the tax and welfare systems
needs to be comprehensively reworked, including a large increase in
the tax-free threshold to eliminate the absurd system of taxing
low-income earners and returning their money as welfare, a practice
which fosters a debilitating sense of dependency.

To secure Family First support, the package should implement a
policy which Howard has talked about for years and which is a core
part of that party's platform: income splitting.

Such a package could be funded by the full sale of Telstra, an
issue on which Family First will be sure to compromise to secure
implementation of a centrepiece of its platform. Additionally, the
Coalition could renege on the host of targeted tax rebates and
concessions it promised. It is possible it will have the political
cover of Family First insistence in the Senate.

Income splitting would deliver far more relief than the proposed
increase in Family Tax Benefit B. And large-scale tax relief would
enable Howard to demonstrate that those who lose targeted rebates
are actually better off under the new scales, arguing that they
effectively have their rebates and more, along with benefits to all
other working Australians.

A second crucial reform area is industrial relations. This is no
time for half-measures. It is a once in a generation opportunity to
reshape the nation's legislative framework. A truly courageous
Howard Government would abolish the antiquated award system and
replace it with a simple minimum wage. What business is it of
government to assess the economic value of different skills and
trades? It would be consistent with Coalition principles - and
Family First principles - to leave that decision to the market
while maintaining a safety net based on people's needs, not on an
arbitrary government assessment of the "value" of their labour.

In the area of media law, the time has come to repeal
Australia's restrictive cross-media and foreign media ownership
laws. This would actually diversify media ownership, update the law
to account for the convergence of media delivery platforms and draw
additional investment into Australia.

In education, a voucher-based schools funding system would
permanently settle the divisive debate over the public/private
divide.

These are just some of the changes that the Coalition has the
opportunity to pursue. But will Howard have the guts do so?

Critics claim that Howard's conduct of the election campaign was
a ruthless and unprincipled drive to secure his place in the
history books. But Howard will be conscious of the fate that befell
Malcolm Fraser. Cautious, protectionist and indecisive, Fraser
squandered an actual Coalition majority in the Senate and dropped
the ball on reform. He is reduced to being trotted out as a
fashionable apostate at left-wing talk-fests and is regarded with
derision by much of his former party.

The road is open for Howard to secure an exalted place in the
mythology of his party and his country. But it will require
courage, conviction and determination.

As Margaret Thatcher said to George Bush snr in the lead-up to
the first Gulf War, "This is no time to go wobbly."